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Case Study : BMW Motors

On December 21st, 2019, Posted by Lifesaver Essays

Executive Summary

The case study analyses the esteemed automobile firm of BMW Motors that is thriving to excel in the global market. Talking about this case study, the theme of it is to focus on those aspects of the global issues and the performance of rival companies that are making it difficult for the BMW organisation to compete in the global market. The raising concerns of the environment, the enhancing demands of customers for the technically equipped vehicles and the upsetting economy of the world are all together, making it difficult for the company to maintain its position and hold on the market. Consumers demand for the vehicles that can be attached to their devices and thus have developed connectivity. Moreover, the global warming issues that are caused by the fumes of vehicles have also put pressure on the automobile world to change their manufacturing techniques and develop the parts that are eco friendly. Suggestions for the alternative fuels have also been made. BMW also needs to enter into the new markets that have remained untouched to develop a greater fan base. The analysis of different problems through various marketing tools has been made in the report to get a better insight into the market of BMW and different global issues that are affecting its reputation.

 Introduction

The concern of this case study has been to analyse and study the problems and issues which are being faced by one of the most automobile giants, i.e., BMW Motors. BMW Motors has been facing problems for quite a few times in context with its global business. The unstable global economy and the development of local rivals have made it difficult for the BMW cars to maintain their consistency in the market regarding production and price (Verbeke, et.al, 2013). This case study has been conducted to analyse those problems for the BMW Motors and then suitable solutions have been recommended in context with the latest development plans made by BMW. Moreover, SWOT and PESTEL analyses have been conducted on the BMW Motors that have helped to get a better understanding of the problems and challenge the company to carry out this case study. Suitable recommendations have been made for future development of the company followed by an apt conclusion of the entire case study.

 Background

BMW Group is the child organisation of BMW AG, i.e., Bayerische Motoren Werke Aktiengesellschaft, which is headquartered in the Munich at Germany. The company in the present global scenario has emerged as one of the leading brands for the creation of most luxurious cars that ensure comfortable driving with every luxury at the owner’s dispense. BMW Motors was reported to sell nearly 2.2 million cars in more than 150 countries last year (Rivoli, et.al, 2014). Though the company is setting benchmarks in the automobile industry, yet different complications have risen with time in the internal functioning of the company as well as in global scenario that have forced the company to develop new marketing strategies and make amendments in its products to match the demands of the customers.

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The marketing mix strategy adopted by BMW is that of product differentiation to help it have an upper hand in the market. The cars of BMW have unique and advanced features that are in consonance with the latest technological developments. The introduction of connectivity of the BMW cars with the internet and devices of the owner has made it the top priority of the customers (Neelankavil, et.al, 2015). In spite of these advancements, few problems have surfaced that require the company to change its policies in terms of global context. The venture of the company in the developing economies and the attempts to match the parameters of the global standards for conservation of the environment require reframing of the policies.

 Methodology

SWOT and PEST analyses have been utilised to extract data for the case study on BMW. An extensive research was carried out with the help of available resources. For instance, different books and journals were referred along with magazines which carried on data about the latest advancements of BMW. Various websites related to BMW were consulted so that the background of the company, the roots of its problems can be analysed and then suitable solutions can be suggested.

 Issues & Problems

Venturing in international markets leads to the face off of the companies with various unseen challenges that companies have to overcome in order to build their international reputation and establish firm roots in the global scenario. Though BMW is not a new company that has to venture into the market on other nations, yet the building up of different automobile competitors in local as well as global markets has forced the automobile giants to reconsider their stance in the global market by recognizing and solving various issues and problems that surface in global business (Meyer, et.al, 2016). An assortment of problems that BMW has to face in global business is as follows:

  • GLOBALISATION

Globalisation has brought companies of diverse background on the same forum. Markets of developed economies, for instance, China, Japan, America, are flooded with the automobile giants, leaving no space for entrepreneurial stances (Papadopoulos, et.al, 2014). This has led to mayhem where both investors and consumers have gone confused about their preferred brands and targeted audience. Therefore, these global automobiles like BMW, are trying to enter in the markets of the developing economies, for instance, Latin America, Russia, who promise a safe market with ensured audiences. Risks pertain in these global scenarios where the audiences cannot be relied upon yet the venture is important for BMW to enhance its production scale and share of profit. The economic strategy of the company gets jeopardised when it has to deal with unreliable and unpredictable audience and BMW is facing this crisis of economic strategy because of being venturing in globalised business where the international audience cannot be relied upon.

  • DIFFERENTIATION

Differentiation implies the exclusivity of the marketing mix strategies which the competitors cannot replicate or imitate. Product differentiation is fundamental among all other marketing mix parts which BMW has to aim at to sustain its current position and reputation in the market (Gottschalck, et.al, 2014). Buyers desire for a comfortable car ride that must also ensure luxury. Nearly every automobile company launches its new features periodically. Therefore, along with the risks of new market, BMW is facing the problem of developing new marketing mix strategies.

  • INNOVATION

The luxurious cars of BMW have already set the parameters so high for the automobile sector that BMW itself is now facing the crisis of generating new ideas and features for its future markets. Innovations are the core of marketing mix because customers today desire for more than what their contemporary partners are dealing with. The project management issues have surfaced because of this innovation related problem since every project now requires revision in order to strategies it according to innovative demands of customers. Moreover, the commitment of BMW for launching new features time to time for its customers and the promise of periodical innovations has now posed a challenge to the company itself.

  • COMPETITION

69% of the market of BMW is filled with automobile rivals who are giving tough competition to the company in terms of cost and features (Chand, et.al, 2014). Moreover, the introduction of cheap automobile vehicles in market with smart features has further provided company with serious competition because. This has left a very small base of customers who can actually afford the BMW motors because of high maintenance costs. Marketing of the company too poses a problem because of the large number of markets it caters to while its rivals have the advantage of being existing small and thus greater control on market.

  • ALTERNATE PRODUCTS

Alternative products demand the shift of company from its main production unit to other products that may enhance the fan base for the company. The target of BMW is on those customers who aim for quality driving while other automobiles have carried on to become its substitutes. Moreover, BMW also aims at helping the entrepreneurs across the globe to become the part of its distributor network but it is difficult to identify such people on the international platform.

  • GLOBAL WARMING

The raising awareness and concern of the world regarding the problem of global warming have made an unseen pressure on the automobile sector to go green and develop the eco friendly vehicles that are in accordance with the conservation of the environment. The target of BMW to sell 1.8 million vehicles by the end of the year, along with its compact vehicle Rolls Royce seems to be unachievable now because of the time and capital that will be invested now for the development of the eco friendly models first (Gupta, et.al, 2016). Moreover, the scandal of VW/Audi has revealed the faulty emission control TDI engines of VW. BMW too was reported of utilising the VW technology in one of its environment friendly stock and before it can give clarifications; the stocks of company fell by 30% that highlights the environment concerns of the customers. Company now has to rebuild its image in the VW and consequently global warming issue that seems to be a distant vision.

All these problems are restricting and abusing the sales of BMW which is adversely affecting the economic and project management strategy of the company. These problems have surfaced more because of the legislative activities of the German government that further pressurises the businesses of the Germany regarding their human management policies and issues.

 Solutions

After highlighting the different problems that BMW is going through to maintain its stance and reputation in the market, here are a few strategies that can be deployed by BMW to ensure the easy face off with the problems that have been mentioned in the global context under the previous heading. Though the solutions cannot be ensured to be sure shot for solving the crisis of such an extensive and globally operating multinational automobile company, yet they may prove fruitful in ensuring the easy time of company during the implementation of its global policies and strategies in the developing economies. Therefore, the solutions have been mentioned hereafter under the same heading as the problems were mentioned above:

  • GLOBALISATION

The careful calculation of merger and acquisition by the company is the only solution for the problem of BMW that will help it to solve the problem of over taxation (Nevin, et.al, 2013). Moreover, it will also help the company to keep a check on the market in terms of latest technological development, local competitors, choices of customers and their brand and quality preference that will help ensure the easy penetration of its vehicles in the markets of developing economies. Moreover, instead of installing new manufacturing units, BMW must aim at acquiring the already existing plants that will help reduce the investment and time to start manufacturing process. Time and capital saved from this sector can be invested in developing the global image of the company in the minds of the targeted consumer range.

  • DIFFERENTIATION

The technological advancements in the vehicles of BMW are surely noticeable. In terms of differentiation, the company only needs to venture further in the ecological sustenance of its vehicles since its vehicles require heavy engines and fuels. The introduction of eco friendly measures in its vehicles, for instance, development of alternative fuels and comparatively lighter engines, will surely give company an upper hand in its market above its competitors. Moreover, security features of the vehicles can also be developed to ensure a safe drive to the customers.

  • INNOVATION

For innovative approach towards its products, BMW can utilise the features of the Intel Xeon processor 5500 series (Ferraro, et.al, 2015). It will assist the organisation in striking a perfect balance between its hardware and energy costs, which will help ensure the increment in its performance level. Inventions can be made in different arenas, for instance, Connected Drive system which will allow the connectivity of car with the outside world and other personal devices. These innovations have been attempted by BMW motors in its BMW 7 series. Further innovations in this field are sure to provide BMW a unique stance in the market.

  • COMPETITION

To get a competitive advantage in the market over other competitors, BMW has launched its new models which have set a benchmark in the automobile industry. These models include X3, Z4, X5 which consist of luxurious and sporty features and are capable of luring the customers towards themselves (Peng, et.al, 2016). Moreover, under the merger and acquisition strategy of BMW, it has acquired the Rolls Royce and Mini Cooper which has enhanced the level of competition in the automobile market to another level for rival industries.

  • ALTERNATE PRODUCTS

The priority of BMW for the quality maintenance of its car has already provided it with an advantage over other rivals that does not necessitates the introduction of any alternative product. Moreover, the premium quality of BMW cars is still prestigious for the customers that have helped it to become a top class car in the market.

  • GLOBAL WARMING

To combat the adverse impact of global warming on the sales of BMW, the referred automobile company has invented new features that will help in the reduction of capital investment and fuel consumption that will ultimately lead to the reduction in pollution level created by the cars of BMW (Hill, et.al, 2013). BMW is largely considering the options of alternative fuel sources as well as working on the project of developing electric cars that do not require any sort of fuel.

 Evaluation

To evaluate BMW Motors, a SWOT and PEST analysis has been conducted here after. It will help to understand the real situation of BMW in its attempt to tackle the issues that are surfacing in the global business.

SWOT Analysis

The SWOT analysis will help to find out more problems associated with BMW will also suggest the strengths of car that can be developed in to future as an opportunity.

Strengths 

Only German automobile industry to expand globally in a positive manner for last 30 years.

·         A humongous work force of 97,500 works to help expand business globally and ethically (Kearfott, et.al, 2013).

·         Presence of huge capital to venture in future markets.

·         Know how to strike a balance between the defensive and aggressive methods of marketing strategies.

·         One of the leading brands of cars that no rival can match.

·         A huge fan base that is expanding with time.

·         One of the best employers that caters to the needs and demands of workers.

Weaknesses

The necessity of volume growth in order to meet out the requirements of shrinking lifestyles of customers.

·         Cars are mostly expensive which deprives a huge section of BMW fans to own the car.

·         In case of any damage, it is difficult to find the parts of car for maintenance since its parts are not available everywhere.

·         The number of cars manufactured on a daily basis is not sufficient enough to flood the market with its products.

Opportunities 

The presence of large size of capital will help the company to expand more and reach even the untouched markets of developing economies.

·         The company is currently working new models, including one sports brand.

·         Its market is increasing in the western countries which are helping to generate more profits for further innovations.

Threats

Toyota is threatening BMW in the global market while Mercedes and Audi are threatening its local market.

·         The compact economy of Germany is acting as a pull factor for its development.

·         Same comforts of BMW are being cheated by other companies to avail those facilities to the customers at much lower prices (Voegtlin, et.al, 2012).

PEST Analysis

The PEST analysis will help to understand the various pull and push factors of society in context with BMW. It will help to know more problems that are being faced by the company.

Political

The actions of German government are not acting in positive manner for the growth of the company.

·         The legislative policies of the government of Germany are affecting company negatively.

·         The company needs to understand the significance of the government at various stages of production and then act accordingly.

·         Political ideologies and regulations in the markets of Europe and U.S. are affecting it negatively.

Economical

BMW produces large number of cars in millions that is able to generate high revenue for the company and that will be helpful in its future ventures.

·         The GDP of BMW had enhanced by 1.2% in one year only (Piekkari, et.al, 2014).

·         The Brexit issue are bound to affect the economic status of the economy.

·         Developing economies like India and developed like China can provide good financial assistance to the company in terms of settlement, infrastructure and market.

Social 

The customers are now getting inclined towards the eco friendly and fuel efficient vehicles. BMW is yet to work in that department.

·         Recession and the disturbed global economy are also affecting the sales of the company (Jeurissen, et.al, 2013).

·         Environmental issues are a matter of great concern for the company.

Technological 

The technology that BMW employs for its cars is commendable that makes even the rival companies drool.

·         New and sophisticated technologies need to be utilised more by the company that is easily graspable by the customers.

·         Current vehicles that pollute the environment need to be technically upgraded.

 Contribution to global issues 

BMW is one such car that has contributed immensely to the development of an inclusive society. Companies like BMW can play a significant role in developing a peaceful and tolerant world because of the interaction that they generate among the audiences of different nationalities and background during its public sessions and meetings.

BMW has helped to develop the local entrepreneurs of different nationalities by helping them start their own businesses in automobile sector related to transportation, retailer, showrooms and various other professions and services related to the value chain supply of any company. This has eased the burden of the population on the local governments in terms of employment (Grossmann, et.al, 2013). Moreover, the intercultural understanding has been boosted by the company by developing interactions between its various offices belonging to different nationalities.

The social entrepreneurs have been supported by BMW that has contributed immensely to the global business because of the generation various members in supply value chain and consequently a more developed and interdependent global economy.

Recommendations

After analysing different features, problems and aspects of BMW, it is being recommended to the company that it must at the markets of the developing economies because that will help it to become a more common and widespread name of the automobile world. Moreover, company also needs to cater to the choices of customers. Therefore, further technological advancements are being suggested, for instance, development of such chips and tools that can enhance the driving experiencing of the owner without compromising on the security of the personnel. Not only the technological advancements, company also needs to look towards the sustainable and eco friendly development of its vehicles which do not contribute to increasing the  carbon content of the atmosphere and can thus ensure safe and green drive.

Conclusions

It can be concluded that no matter how big and successful a business organisation is, it also has to face various challenges that need to be mitigated out immediately in order to sustain in the market. The case study of BMW suggests that thought he company is a big name in the market for its cars, yet it has to suffer from problems that may risk out its entry or existence in the market.

BMW needs to venture into the developing economies that are looking forward for the foreign investments. BMW is facing tough time surviving in the developed markets where there is a flood of automobile entrepreneurs and rivals. Therefore, it needs new market for its products. Moreover, the pressure on the company for going green is also generating problems but that will not be a much issue because of the efforts of the company to develop the electric cars and also the development of light engines that can work on alternative fuels. The political scenario of Germany is too not very friendly for the business of BMW yet these problems can be mitigated out easily looking at the reputation of firm in market. The company needs to work on its technology to enhance the driving experience of the customer.

References

  • Chand, M. and Tung, R.L., 2014. The aging of the world’s population and its effects on global business.The Academy of Management Perspectives,28(4), pp.409-429.
  • Ferraro, G. and Brody, E.K., 2015.Cultural Dimension of Global Business. Routledge.
  • Gottschalck, J. and Polke, J., 2014. Global purchasing processes in the business sector automotive aftermarket.
  • Grossmann, I.E. ed., 2013.Global Optimization in engineering design (Vol. 9). Springer Science & Business Media.
  • Gupta, S. and Bhaskar, A.U., 2016. Doing business in India: cross-cultural issues in managing human resources.Cross Cultural & Strategic Management23(1), pp.184-204.
  • Hill, C.W., Cronk, T. and Wickramasekera, R., 2013.Global business today. McGraw-Hill Education (Australia).
  • Jeurissen, R. and Nijhof, A., 2013. Egalitarian foundations of a global business social contract.Transition redesigned: A practical philosophy perspective, Praxiology20, pp.65-78.
  • Kearfott, R.B., 2013.Rigorous global search: continuous problems (Vol. 13). Springer Science & Business Media.
  • Meyer, K. and Peng, M., 2016.International business. Cengage Learning.
  • Neelankavil, J.P., 2015.International business research. Routledge.
  • Nevin, J. and Blythe, V., 2013. E DIRECTO.Supply Chain Management, p.3.
  • Papadopoulos, N. and Heslop, L.A., 2014.Product-country images: Impact and role in international marketing. Routledge.
  • Peng, M.W., 2016.Global business. Cengage learning.
  • Piekkari, R., Welch, D. and Welch, L.S., 2014.Language in international business: The multilingual reality of global business expansion. Edward Elgar Publishing.
  • Rivoli, P., 2014.The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. New Preface and Epilogue with Updates on Economic Issues and Main Characters. John Wiley & Sons.
  • Verbeke, A., 2013.International business strategy. Cambridge University Press.
  • Voegtlin, C., Patzer, M. and Scherer, A.G., 2012. Responsible leadership in global business: A new approach to leadership and its multi-level outcomes.Journal of Business Ethics,105(1), pp.1-16.

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